Bank of Japan 'could be stripped of independence'

24 December 2012

The Bank of Japan could face repercussions if it refuses to set a two per cent inflation target.

The Bank of Japan (BoJ) could be stripped of its independence if it fails to back an inflation goal set by incoming Japanese premier Shinzo Abe.

Mr Abe said he will try to revise a law guaranteeing the bank's independence should the lender refuse to set a two per cent inflation target, the Daily Telegraph reports.

He revealed his intention to select a person who shares his opinion on the need for more effective monetary easing when it comes to naming a successor to governor Masaaki Shirakawa at the end of his term in April 2013.

The BoJ has said it will explore the possibility of setting an inflation target when it next convenes for a meeting, which is to take place in January.

Mr Abe stated: "If it doesn't, we'll revise the BoJ Law and set up a policy accord with the central bank to agree on an inflation target."

By Tony Aynsley

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